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India's garment industry losing out to Bangladesh

 
India's garment industry is losing out to Bangladesh due to rising input costs, especially on labour and tax incentives, a minister has said.

Bangladesh Commerce Minister Ghulam Muhammed Quader said rising input costs in India and China - the two big players in readymade garments business - offered a good opportunity for his country to expand its readymade garments business.

"India is shifting away from the readymade garments business. There has not been any significant investment in India in the readymade garments industry in the recent years," Quader, who was in India to attend the Partnership Summit in Agra, told IANS in an interview here.

He said rising wages and other input costs would make the readymade garments business uncompetitive in India and China.

"This will be a big opportunity for Bangladesh to develop its readymade garments business. We are already benefiting from it," he said.

The garment industry has become the mainstay of the Bangladesh economy, accounting for more than 80 percent of the country's exports. Bangladesh's exports in 2012 were $24.3 billion, of which garments contributed $19 billion.

Apart from cheap labour, Bangladesh's readymade garments industry also benefits from tax incentives on exports, especially to European countries.

Bangladesh, which is categorised as a least developed country (LDC), enjoys duty-free access to European markets, while Indian firms have to pay 9.6 percent duty.

Merchandise trade between India and Bangladesh was $5.51 billion in 2012, out of which India's export was $4.94 billion and import was $0.57 billion, according to India's commerce and industry ministry data.

"Our imports have increased. Some people take it in a negative sense because balance of trade is heavily in favour of India. But these are the products that we need. If we don't buy these from India we will have to buy them from some other countries at higher prices," he said.

Quader said India-Bangladesh economic and political relations have strengthened in the recent years. He said $1 billion soft loan offered by India would help develop infrastructure in Bangladesh, especially rail and road networks.